I’m not much interested in the machinations of who buys logs of what size and from whom. I’m an economist. As such, I get excited when corporations find new and interesting ways of turning inputs into something more valuable.

What bothers me are the following facts:

1. FEA is broke. Gone, forever.
2. Gunns closed today at 11 cents, despite a balance sheet showing some $800 million worth of freehold land, planted with various species of gum trees.
3. Forestry Tasmania, otherwise known as a sheltered workshop for Labor cronies, couldn’t make a profit even if it were gifted the entirety of Tasmania’s forests. Oh, I forgot, it was.
4. The backbone of the plantation industry is dead. Not a single MIS promoter is offering plantation investments in Tasmanian anymore. This contrasts with $350 million in 2004/05.
5. Ta Ann would be totally unviable were in not for public grants and subsidies. Happy to provide the numbers on request.
6. On my numbers, the remaining handful of employees in the native forest sector contribute a net loss to State Final Demand.
7. The total contribution of the much-vaunted `special timbers industry’ is a net loss to the State of around $250 million per annum.

I could continue, but I have trees to hug.

The few hardcore pro-loggers with half an ounce of intelligence will soon realise the world has changed, scrapping resources at a loss is not sustainable, and anyway, who really wants to go to work wearing a fluoro vest?

It’s not hard to prove that ceasing native forest logging, ending subsidies to the timber industry and focusing on the future is a better option than that offered by the intellectually challenged members of Willie Hodgman’s cheer squad.

• As Australian operators prepare for the year ahead, IBISWorld unveils its annual list of the top five industries set to soar in 2012, and the five expected to sink ...

Industries to fall

Pulp, paper and paperboard manufacturing

Australian pulp, paper and paperboard manufacturers will struggle to remain relevant as more Australians trade-in printed books and other documents for iPads and eReaders, affecting demand for industry products. IBISWorld forecasts industry revenue will fall 3.7% over the coming year.

Australian paper producers have been battling for some time now against foreign producers that have significant cost advantages. The price of woodchips is expected to continue to remain high in 2012 – resulting in continuing high prices for printed materials. This will be an additional reason for consumers to go electronic.

Delays in the development of a number of key production sites such as the Gunns mill in Bell Bay, Tasmania and the Protavia mill in Penola, South Australia have also dented industry productivity.

The State Opposition claims the forest peace deal to end almost all native forest logging in Tasmania will increase the risk of bushfires.

Spokeswoman Elise Archer says Forestry Tasmania is shedding staff as a result of the federally-funded deal, in turn hampering its ability to fight fires.

The state-owned business is currently monitoring several fires across Tasmania.

Ms Archer says the forest deal is also driving forest contractors out of the state who are often volunteer firefighters.

“There’s no doubt that there will be less jobs at Forestry Tasmania as a direct consequence of locking up our forests.”

“The intergovernmental agreement process has been a sham and a disaster from the start and I have confidence, and I’m sure most Tasmanians have little confidence, that the Government is able to deal with this process.”

The Acting Premier, Bryan Green, says the Liberals are being mischievous and are politicising bushfires.

He says the peace deal sets aside $7 million a year to maintain any new reserves created.

“There is a whole range of things that can happen in the natural forest.”

“In fact the forests themselves naturally regenerate as a result of fire.

“We have to manage that in a way that ensures that peoples’ safety is not compromised and the way to do that is providing funds from the Commonwealth to assist us through that process and that’s what we’ve done.

Excuse my tangent on the topic, but it is relevant to the current impact of what is going on.

Looking out of my front windows across the harbour earlier this morning, another depressing sight… I wish I had a good camera so I could share it. A huge dust storm was in play at the mill site. It must have been huge as it looked big from my place at Beauty Point. I felt bad for those much closer who would have to endure the shifting sands in the air…

Posted by Shan Welham on 05/01/12 at 10:00 AM

“Those closer” you say Shan? You mean the people who live in Georgetown?
Rowella, Sidmouth, Kayena is only populated by ghosts and cardboard cut outs. They don’t actually exist, or so we are told.

Posted by Pilko on 05/01/12 at 10:13 AM

“Half an ounce”!!! You’re feeling a little generous, Jarvis!

“Spokeswoman Elise Archer says Forestry Tasmania is shedding staff as a result of the federally-funded deal, in turn hampering its ability to fight fires.”

FT is shedding staff because they have a failed business model, no incoming profit and can’t pay them. The mythical “forest peace deal” hasn’t been put into effect, and FT is still logging with no sign of recording anything but another loss. Then try reality, Ms Archer, and support our Tasmanian Fire Brigade to be funded to do the job they are trained and paid. Regarding fuel-reduction, try using indigenous knowledge experience and employing them within Parks and Wildlife to manage our forests.

Posted by Russell Langfield on 05/01/12 at 11:47 AM

Gunns shares hit 10 cents today, this should please Unisuper members as when any volume is offered on the market the share price plunges and they and the 5 other large shareholders with 70% of the company would appear to have no way out.

The market values the company at less than 90 million and no takeover is in sight.

Under 10 cents may see the finish as the ANZ has managed the asset sale and taken the proceeds without the costs incurred by Liquidators.

I ask have they indemnified the Directors over insolvency whilst extracting the sale proceeds?

The leased land with a sitting tenant paying no rent is worthless as are the MIS plantations seemingly now untended standing thereon.

I suggest that the Bank will not roll over the Loans at the end of the month or they would have allowed payment of the creditors.

The last remaining assets of any substance are the possible Pulp Mill Permits but Tasmanians have Gunns tied up in Court over expired permits and a class action.

Until these matters are resolved no sensible JVP would take the risk.

Posted by john hawkins on 05/01/12 at 03:53 PM

Crow and chortle all you like, Jarvis, but the LibLabs are still behind the wheel.

Gunns and FT may be floating past in the gutter, but our elected reps have already linked up with the Sarawak Ta Ann, and there is nothing barring further deals with the Camorra, the Mexican cartels, or the Russian Mafia ,if that also bellies up. Tassie has resources, and their trustees are people like our Bryan.

The estimates of Tassie"s functional illiteracy rate starts at 49%. Given our current education system and mainstream media, that can only rise. What does our govt have to worry about?

Tassie as we know it will survive in the short term. After that, who cares?

John Hayward

Posted by john hayward on 05/01/12 at 07:07 PM

It is developing into an interesting situation.

On its share price, Gunns is now worth about $90 million. Tomorrow it could be less if the current trend continues.

They were in debt at the time of the last annual financial statement to the tune of $816 Million, of which the lions share belongs to the ANZ. They can only pay off $350 of this if all their asset sales materialise in time for their end of the month meeting with the bank. The remaining $200 million they wish to roll over until the end of the year.

It is unclear who owns the balance of this debt of about $266 million and whether they will share the spoils if ANZ forecloses on them.

Meanwhile, on 16th Jan they have to find money to pay all the GNSPA creditors - from memory, about $12 million.

They have just announced that their profit forecast has dropped to a mere $30 million for the current quarter, but that does not take into account any losses associated with some of the current law suits against them. However, in their latest statement to the ASX, John Lawrence has pointed out that their assets appear to be somewhat flexible in interpretation and are probably overvalued. He estimates that far from having a profit, they are more likely to have posted a $145 Million loss. On their year-end balance sheet, their plantation assets were valued at $640 million, which became $700 million in their AGM address and about $800 million when talking to JVPs.

They are also claiming a rather dubious $240 million start to their pulp mill, which will immediately become a loss if it is deemed not to be a ‘substantial commencement’, which will decrease their company worth by double that amount financially when the money is transferred from the positive to the negative side of their balance sheet, probably making them insolvent. This will put them into immediate liquidation as they have nothing remaining to offer any JVP and the mill is no longer a saleable asset and their liabilities, even by their own accounting standards, exceed their assets.

Alas, poor shareholders - zilch!

Then there are those other considerations. John Gay managed to get a TWO month extension on his court appearance which puts it after the ANZ meeting. Following on from this will be the shareholders claim against Gunns for failure to inform the ASX of the impending loss and that could result in another couple of hundred million payout. Bit difficult from their $30 million proclaimed earnings.

Then there are all those valuable earthworks to pay for as well, followed by their Supreme Court hearing to top it out.

I can understand why Gunns do not want to withdraw from the Magistrate Court case. They see this as the only possible salvation of the company, for if they win, they can claim costs of $1.3 Billion from Lucy Landon-Lane and the Pulp-the-Mill group and save the company! That is, of course, if the case, like John Gay’s one, is not deferred till after the end of January.

Do I hear the distant howls of wolves?

Posted by Barnaby Drake on 05/01/12 at 09:28 PM

Friday morning, 6th of January and Gunns opens on the stock market at 10.5 cents.

Oh how the mighty have fallen.

Their graph shows what is happening if you care to read it. It hits a platform for a few days, while the big boys jockey for position and sell shares, many of which they borrow. The price than plummets sharply and the big boys buy shares back again and replace all those shares they borrowed and start again.

On 2 million shares they can pocket $40 000 profit on a 1 cent drop in price and double that for a 2 cent drop.

They are the only people who will make any money from Gunns.

Until the price hits rock bottom and some rather optimistic buyer steps in when the saleable assets exceed the share value and buys up the whole company for a song, or when the liquidators are called in, then this game will continue. Possibly as low as 6 cents a share? Today could be the day we see it hit single digits for the first time?

Posted by Barnaby Drake on 06/01/12 at 07:50 AM

What would you say is the rock bottom price Barnaby? If not $.11, maybe $.08 or $.04?

Posted by GL on 06/01/12 at 09:36 AM

Has the Green Triangle sale been finalized if so did Gunns receive the $107 million?

Posted by john hawkins on 06/01/12 at 11:01 AM

So, in the six weeks since the Gunns’ delayed AGM held in another state to avoid being approached by the locals, their share price has halved ($0.105).

Seems the mum and dad investors didn’t believe the same old same old spiel and spin offered up again by the Chairman and Directors and have sold as soon as they could.

One wonders just who voted this incompetent rabble back onto the Board at the AGM?

Re #9
Those involved in the Green Triangle sale negotiations would be better off waiting to snap it up at $7million rather than the $107million Gunns is so desperately after.

Posted by Russell Langfield on 06/01/12 at 05:38 PM

Re #8
John Gay obviously thought it was rock bottom at about $0.90

Posted by Russell Langfield on 06/01/12 at 05:39 PM

8.What would you say is the rock bottom price Barnaby? If not $.11, maybe $.08 or $.04?

It is difficult to say what the absolute rock bottom price is for Gunns.

Since Standard and Poors declared their shares as ‘Junk’, nobody seems to want them for any other purpose other than to ‘short’ with.

This will continue the downward trend for as long as the banks think their capital is safe and they can recoup their sales before the receiver steps in and they are left stranded. It’s both a matter of timing and value. They know about the meeting with the ANZ at the end of the month and they will probably only stop shorting shortly before that to wait and see. By that time they will have taken whatever they can out of the market and the lower the price, the less they have to lose. Maybe some will offload the remainder to someone who may be prepared to take the risk as low as 4 cents and wants to try to capitalise on Gunns assets after the ANZ has taken what they can.

Gunns only way out of this is to actually find a Joint Venture Partner before the end of January - a most unlikely event!

The big boys like these continuous announcements from Gunns, as it induces a few gullible investors to buy shares and pushes the price up a little so they can continue to short from a slightly higher level. Just follow the announcements window on GNS page and see how the announcements by Gunns of potential JVPs are always followed by about half a dozen changes in substantial holdings announcements by four major banks. It’s the same four every time. They all play it like a yo-yo.

My prediction, 6-7 cents probably - 4 cents possibly.

Posted by Barnaby Drake on 06/01/12 at 05:56 PM

The barely hidden delight in the complete failure of Gunns does not reflect well on some commentators here. The best outcome would be a solution that realises the not inconsiderable potential value in those plantation assets - with some return to those who paid for the local services that established them.

My first MIS woodlot investment with Willmott Forests facilitated the protection of temperate native forest (and that’s a good thing) that runs from Eden to the Snowy Mountains escarpment. Once the silk-coated barristers and fee-driven liquidators have creamed off their fees investors (many of an ethical disposition and some corporate-green) are likely to realise $6 per hectare for established plantation forest worth ~$48k at stumpage per hectare - even at today’s depressed values.

Should the ANZ start swinging the big axe, the same will happen to Tasmania’s big (collectively) investors.

I don’t know how those silks compulsorily acquired my assets agsinst the liabilities of Wilmotts Limited versus my independent MIS structure but they have almost successfully done it. In that instance there has been an unheralded transfer of wealth from original investors to the firesale tenderers.

I expect the same is about to happen in Tas with the ANZ, as has happened with the CBA in NSW/VIC. The irony is that the original investors with some foresight into the need for a replacement resoource will carry the can. Meanwhile the resource will be picked up almost free of charge AND local servicess will again be paid to do the accounting, forestry maintenance and extraction.

Some Canadian, Chinese, Malaysian or Indonesian bidder is about to pick up a bargain with returns after costs heading offshore. One or two will rustle superficially through the documents, tooting their superiority, whle laughing lang in their backyard field.

Once upon a time the Federal government was prepared to underwrite the development of a expertise in an industry of potential strength in Tasmania ... but not any more I fear.

The ANZ like the CBA before it will cover all its costs from individuals like me. Some foreign owned entity will return profits to its shareholders and Tassie and the quality of its bureaucratic and political classes will be labelled a basket case.

Posted by Trevor Burdon on 06/01/12 at 07:54 PM

Tomorrow I will speak with Gunns Plantations, specifically to determine the independence of my plantation assets against the liabilities of Gunns Limited.

I will make that request of the Board and report my findings here.

Posted by Trevor Burdon on 06/01/12 at 07:57 PM

Competing in a world where electrons are replacing paper in s country with a relatively high dollar value and high labour input costs probably makes a JVP as unlikely as a takeover.

The slow death of Australian manufacturing of low value commodities continues.

Posted by phill Parsons on 06/01/12 at 08:26 PM

john hawkins 9. The Green Triangle sale was supposed to have been completed by their AGM in November last. There were delays apparently. They are still waiting for the $108 million or whatever it was I believe. In their annual report they called it a ‘transaction in progress’.

Posted by Karl Stevens on 06/01/12 at 09:44 PM

Trevor Burden #13, I am interested in the figure you give of plantation resources being worth $48k per ha at stumpage.
That is an extraordinarily high figure, at a price of $35 per tonne (which Macquarie bank promised its investors) that would mean that the plantation would have to return 1371 tonnes per ha.
That is 10 times what most plantations in Tasmania are returning and also a much better price than anyone here is likely to get. Gunns in their IIS were talking about paying $24 per tonne for plantation pulpwood.
I am also surprised that the lawyers have somehow managed to steal your assetts. From what I understood the investors paid for the land and trees and paid an annual fee for management. The company claimed the land as theirs but the trees were supposed to be owned by the investor.
It always sounded like a total rort but from what you say it definitely has turned out to be one.
Sorry that you have lost your money to a bunch of sharks.

Posted by Pete Godfrey on 07/01/12 at 06:04 AM

Re #13
“The best outcome would be a solution that realises the not inconsiderable potential value in those plantation assets…”

Potential value to who? Certainly not any commercial market, as evidenced by the collapse of the entire Australian MIS industry. Just the non-astute ‘investors’ caught short, I’d say.

“In that instance there has been an unheralded transfer of wealth from original investors to the firesale tenderers.”

What did you expect? That’s the norm when divvying up what’s left of the carcass. Banks, creditors, then investors last.

“Meanwhile the resource will be picked up almost free of charge AND local servicess will again be paid to do the accounting, forestry maintenance and extraction.”

Yeah, right.

“Some foreign owned entity will return profits to its shareholders and Tassie and the quality of its bureaucratic and political classes will be labelled a basket case.”

Re #16
Supposed to be “finalised” by the end of January 2012, but I reckon an astute investor would hold off until after or just before then and pick it up for a song before the ANZ claims it to recover Gunns debt.

Posted by Russell Langfield on 07/01/12 at 08:46 AM

Ed, if you’re going to edit my posts, please make sure you do so accurately. The “Tomorrow” quoted was written by Trevor on a friday, therefore tomorrow would be Saturday as I pointed out in my original submission.

I doubt if Trevor would be able to speak with Gunns Plantations over the weekend, get my drift?

Posted by Russell Langfield on 07/01/12 at 09:24 AM

Thankyou #16 #18,

One can only assume that Gunns survival as a listed company is conditional on this payment of 100 million dollars plus which will flow through their accounts to the ANZ.

Had this money been recieved last year Gunns would have probably been put into Liquidation by its creditors.

Gunns may have a Heads of Agreement over the sale but I agree with Russell the buyer will be better off to wait as the Liquidator beckons.

Posted by john hawkins on 07/01/12 at 10:35 AM

Re# 17. Thanks for your closing note of sympathy. I can tell you things looked very different in 2001. I believe it was the huge cash flows in later years (2004,05,06) into the industry that really created the fever ... and the sharks.

My last investment was with Gunns in 2001. It will irritate many here to know that GPL actually set a very high standard of professionalism. This was wood for export before the pulp mill had been mooted, and when plantation under management was less than 5% of that held now.

I did hesitate before hitting send as Willmotts have variously used 1/2 ha and ha figures. These are pine plantations for pulp and timber and I did revised my NPV down to prices quoted by the lone forester manning the now dilapidated fort in Delegate. These were for lots not subject to the liquidation process.

In my case investors owned land leasing rights and the trees of course. The figure could well be $24k(?). Are you able to direct me to a reference site for current pricing please?

Re #18 I’d be curious to know whether you ever reviewed forestry investments in 2000-01, and if so what did you identify as the major risk to investors (sans ‘’ please)?

You’d know of course that at the time Gunns were supplying the highest grade pulp available to foreign markets, meeting all forestry standards required, and investing heavily in scientific serrvices to maintain that edge. You would also know that the FSC-related social licence is a more recent requirement that in the Tasmanian context is tied more to the objection to the pulp mill than plantation resource itself.

Like many MIS investors I am not a shareholder, and the company’s creditors are not mine. I am talking about the compulsory acquisition of my assets while still prepared to pay ongoing maintenance to a manager.

Again I don’t know how the CBA’s silks have done it but the liquidator has assumed the Responsible Entity role as well. They have spent little to no time investigating how lots might be managed through to maturity by an alternative RE. I have spoken to PBB Advisory’s second in charge on this liquidation. He was taken aback when I asked what were his responsibities to growers!

An interesting footnote is that several high profile investors as exclusive holders of whole plantations appear to have side-stepped the liquidation and firesale!

Posted by Trevor Burdon on 07/01/12 at 12:26 PM

Re #21
The writing has been on the wall for years, Trevor, and you still haven’t got out nor seem to have any intention in doing so. That’s not astute.

As you point out, you will most likely lose all your investment. That’s your own fault for not reading the big neon signs, not mine.

As you also point out you’ve had 10 years to watch the starkly obvious slow-motion train wreck coming, especially when you, not me, invested in it.

Posted by Russell Langfield on 07/01/12 at 03:17 PM

The Sewall website.

Sewall’s an American firm who recently valued FT’s entire forest property covering 1.492 million hectares at $296.700,000 with a land value of Zero.
This firm the consultants to FT notes the following re job losses in the US since 2007:

“Forest products industries in the
United States have reacted to changing
market situations as economic
conditions have changed since 2007. Mill
closures and job losses throughout the forest
products sector have swept the nation,
often with significant local impacts. We
have consolidated and analyzed data collected
by the US Forest Service’s Forest
Inventory and Analysis (FIA) program
and Forest Products Laboratory (FPL), the
US Department of Commerce, and other
sources to provide an overview of the recent
trends and the current state of the forestry
and wood-processing sectors of the
US economy. Looking forward to an economic
recovery, the future will be different
for the forest industry sector and for
forest management than it was prior to
2007.
Since the economic downturn began in
2007, there have been two major driving
economic forces affecting the US forest
sector. The paper side of the forest sector
has been most heavily influenced by
global economic trends and shifts in
global markets for pulp-based products.
The solid-wood side of the forest sector
has been influenced primarily by domestic
driving forces—the principal components
being the drop in new residential
construction from 1.7 million units annually
to 450,000—and a decline in home
remodeling as residential mortgages tightened
and home sales dropped.
Mills and Jobs
FIA statistics show that since 2005,
1,009 sawmills, 15 pulp mills, and 148
other mills closed: together, 19 percent of
all mills in the forest sector. These closures
of primary mills were accompanied
by slowdowns or closures in hundreds
more secondary wood-manufacturing facilities,
resulting in an overall loss of
294,000 full-time jobs over the past five
years.”

As far as I know not one dollar has been paid in USA Government compensation to any person or firm in the USA logging industry; only in Tasmania do we consider this a birthright.

If a weak currency country such as the USA has closed 15 pulp mills what chance Gunns?

Posted by john hawkins on 07/01/12 at 03:57 PM

... the USA has closed 15 pulp mills what chance Gunns?

The mills that have been shut down are in the main more inefficient, older technology that can’t compete with the more recent models. It is a bit like the difference between driving a Ford Customline and last year’s VW Golf.

As one who is interested in environmental best-practice, I welcome the introduction of new technology that can produce fibre with less consumption of energy etc., technology that has, as a result, a lower cost of production which allows it to better withstand market conditions that force those with a higher cost of production to close.

If one takes the view that fibre production facilities compromise their environments, then replacing up to 60 year old technology with the newer versions has to be a win for the environment.

When assessing the economic viability of the Georgetown facility, one needs to be mindful that demand for the end product, eucalyptus fibre, is growing, as due to its fine quality, it is used to coat tissue made from coarser fibre so that our noses and other things :-) don’t get rubbed red raw.

Posted by Michael Lorenz on 07/01/12 at 06:46 PM

Re 22 There is no established secondary market for forestry woodlots ... and the investment is long-term. You see I was thinking in decades not piddling years. If greater certainty was to be re-established, one might still eventuate closer to harvest.

I clearly missed that neon sign - what was on it again? It’d be a punchy and pithy and clear to any astute person with 2020 vision wouldn’t it.

What about “No-one will ever want plantation timber!”, or “No Tasmanian wants a successful forestry industry!”, or “No one will support an alternative resource to HCV forests!”, or “Trees don’t provide diversified growth to market cycles!”

See, I just can’t get my head around it.

What did that big sign(s) say in 2001?

Posted by Trevor Burdon on 07/01/12 at 09:08 PM

Re #24

As one who “welcome(s) the introduction of new technology that can produce fibre with less consumption of energy etc.”, you should be able to appreciate that high quality paper can be made from wheat trash, something which Australia has an abundace of each year as a by-product of food growing.

You seem oblivious to the fact that Gunns recently had a 98% profit drop ahead of posting a $355million loss due primarliy to the collaps of its non-FSC woodchip market.

The “economic viability of the Georgetown (Longreach, actually) facility” has never been assessed publicly by Gunns but the market and even its shareholders have, hence the $0.105 per share.

Re #25
“There is no established secondary market for forestry woodlots…”

Yet you invested in it. Again, that’s not astute.

What about “no-one wants Tasmanian woodchips, even if they’re given away”?

Posted by Russell Langfield on 08/01/12 at 05:49 AM

Re 26. No secondary market in 2001 but Federal forecasts of significant demand and policy development to direct and support investment. Off-market private transfers are still possible of course.

My Willmott trees are 7m tall and healthy. They are clearly worth more than $6/ha. Perhaps $8k at stump tomorrow. The point I was trying to make is that the financial carnage is going to hurt a lot of people. Some who may have thought they were at arm’s length.

In 2001 Gunns were price setters for world woodchips. Your nominated “no-one wants Tasmanian woodchips, even if they’re given away” just wasn’t true in 2001 or even the next seven or eight years.

Where from here in 2012?, some may ask.
Consider the guiding principles outlined below.
If you like, make it available for others to consider.
Our political representatives may assist in the change for a better economy.
Cheers

A good forest economy
by Wendell Berry appeared in the CRANN newsletter in 1997, kindly reprinted from the Scottish Radical Rowan. Its principle arguments extracted from his article below underlie the many aims in the Leitrim ‘local project’.

A good forest economy, like any other good land-based economy, would aim to join the local human community and local natural community or ecosystem together as conservingly and as healthfully as possible
A good forest economy would therefore be a local economy, and the forest economy of a state or region would therefore be a decentralised economy.
A good forest economy would be owned locally. It would afford decent livelihood to local people. And it would be serve local needs and fill local demands first, before seeking markets elsewhere.
A good forest economy would be properly scaled. Keeping the scale reasonably small is good for the forest. Only a local, small scale forest economy would permit, for e.g., the timely and selective logging of small woodlots.
A good forest economy would be locally complex. People in the community would be employed in forest management, logging and saw milling, in a variety of value-adding small factories and shops, and in satellite or supporting industries.
A good forest economy would obviously need to be much interested in local education. It would of course, need to pass on to its children the large culture’s inheritance of book learning. But also, both at home and in school, it would want its children to acquire a competent knowledge of local geography, ecology, history, natural history, and of local songs and stories..
And so, to complete my description of a good forest economy, I must add that it would be a long-term economy. Our modern economy is still essentially a crop-year economy, as though industrialism had founded itself upon the principles of the worst sort of agriculture. ..
But even the slightest acquaintance with the vital statistics of trees places us in another kind of world. A forest makes things slowly; a good forest economy would therefore be a patient economy. It would also be an unselfish one, for good foresters must always look toward harvests that they will not live to reap.
__________________________________________________
Source: http://dev.ecoartnotebook.com/?page_id=20, Cathy Fitzgerald

Posted by Frank Strie on 08/01/12 at 09:44 AM

Re #27
“My Willmott trees are 7m tall and healthy. They are clearly worth more than $6/ha. Perhaps $8k at stump tomorrow.”

Who’s gunna buy em, Trevor? What species of tree are they? Are they good for anything other than woodchips?

“Your nominated “no-one wants Tasmanian woodchips, even if they’re given away” just wasn’t true in 2001”

No, but it has been foreseeably for a while, yet you hang on to them. Can you apply for carbon credit valuation under REDD, or does your MIS negate that?

Posted by Russell Langfield on 08/01/12 at 02:01 PM

8+k per ha is what a privileged few outside the compulsorily acquired assets have a achieved. They are radiata and good for chips or locally milled timber.

The GPL MIS allowed for the sharing of any carbon credits I believe. Without greater certainty around management through to product maturity there are no buyers that I am aware of. These are further questions for my enquiries tomorrow, Monday (as you correctly pointed out).

My requests that GPL remain faithful to their prospectus and associated ATO product rulings have caused the board some concern and helped, I believe, prompt the thinnings required for those woodlots slated for timber and veneer. They are E.nitens. I’ve heard you rail against the usefulness of nitens for any value-adding but not seen any evidence from you for thinking that.

Overall, I am heartened you’ve adopted a more enquiring approach, however given the labels of stupidity you throw about and preference for a goodies vs baddies mentality, I am still waiting for your killer neon sign text from 2001.

Posted by Trevor Burdon on 08/01/12 at 06:24 PM

Re #30
Regarding E. Nitens, we live where they are grown and you obviously don’t. But, go to any timber and hardware store in Australia and ask for E. Nitens timber and I believe you won’t find any. Roberts Ltd in Tasmania even tried to sell some as fence posts but in the end they couldn’t give them away because they cracked and split in no time rendering them useless. I think that would follow on with any structural timber aspirations.

I think you should get opinions from people with hands-on experience, not those trying to promote or flog them.

Posted by Russell Langfield on 09/01/12 at 07:24 AM

#24,Micheal,

I drive a 1982 Volvo with 600,000 k’s on the clock.

I guess on a good day it is worth 1000 dollars but it has served me well for over 30 years. It is none too smart but a new one is 100,000 dollars.

I would actually have to find or borrow this money to get a cutting edge Volvo that would get me to Launceston a little quicker and in more comfort.

It is I suggest the same with a fully depreciated Pulp Mill; the product is the same but I do not have to outlay 2.5 billion dollars borrowed at 10 % to get into the game.

As a result a 20 or 30 year old fully depreciated mill is highly competitive but no one seems to want the product, hence they are forced to close.

The only factor or wild card is the taxpayer activated by the Pollies who under the mantra of jobs and possibly a backhander might just be tempted to chuck my taxes down the drain.

Posted by john hawkins on 09/01/12 at 04:00 PM

Re #31 You’re right I can’t see a Shining Gum from where I live. Perhaps you can(?), and perhaps the MIS investments have had a direct impact on you locally. That would explain a lot.

From what I read E. nitens is a VIC/NSW eucalypt and common in Platypus Country, circa Bombala - the very area at the hub of Willmotts pine plantations. Its interesting to note that I’ve saved native nitens forest and funded them in Tasmania. (Also presumably they haven’t poisoned the platypus there.)

I agree hands-on experience is very valuable, and I do seek it whenever I can. Thank you for your anecdote. Generalising from isolated stories does need to be done critically. It would be naive to think Gunns had extensively used a completely unsuitable species as potential stock for its own integrated business (at the time with chipping, sawmill and veneer plant). It clearly is not suitable for fence posts.

The industry group WoodSolutions has a comprehensive summary of application suitability by species. It nominates general building, flooring, panelling, joinery and furniture uses for nitens, while noting its in-ground life as low - just as it is for Tassie Oak. Both have very high shrinkage; seasoned it is stronger and both are of moderate strength. Blue gum, also planted by GPL in those lots, is listed as good for structural applications as it is borer resistant. The various wood species are not characterised for veneer applications there.

I would hope that the Roberts timber yard would steer customers away from nitens for fence posts in future. Their personal experience is naturally limited and clearly local.

Posted by Trevor Burdon on 09/01/12 at 04:12 PM

Re #33
Roberts Ltd is a large agricultural co-op with many decades experience in all things rural, like Elders.

You still won’t find any E. Nitens, or probably E. Globulus globulus, in any timber hardware no matter what WoodSolutions says. Tassie Oak will be there though, that is if it isn’t all trashed by FT yet in their race to woodchip our native forests.

“It would be naive to think Gunns had extensively used a completely unsuitable species as potential stock for its own integrated business (at the time with chipping, sawmill and veneer plant).”

Gunns have sold, or closed down, all their timber sawmills to concentrate on woodchips for a mythical pulp mill. They never intended using the E. Nitens for anything else and they admitted at their last AGM Plan B is the same as Plan A, hence their share price has halved since. Check their ASX listing to see just what they are focussed on, woodchips/pulp.

Posted by Russell Langfield on 10/01/12 at 06:25 AM

So Roberts are experienced (that you respect), unscrupulous salesmen (that you despise)?! Mr Langfield, I must admit I cannot read you.

I feel we have spent unnecessary time arguing while missing opportunities to inform each other. We have more in common than you realise, and while we need to be critical, contrarian all the time just wears me out. Worse still is that it excludes others and makes the TT blogs quite inhospitable.

I am asserting now that nitens is suitable for applications other than pulp, that some GPL woodlots (yes a small proportion) were for wood products other than pulp, and that I am more interested in whether nitens can be sold in timber yards in a decade. If you have evidence that nitens is unsuitable for those other purposes, or veneer, would you please share that. BTW Gunns Plantations are not and never were obliged to sell timber off-take to Gunns. If the pulp mill is not built as planned, there will be much nitens available to sawmill.

I agree Gunns have narrowed their focus in the last couple of years, but I don’t believe that this was part of the master plan back in 2001. In fact at the time they were expanding their chipping, sawmill and veneer plant. My reading of the AGM confirms Gunns current pulp focus of course, but I can’t find the evidence of a pulp only plan all along. Again if you can oblige ...

Funny : I checked and apparently there isn’t much Tassie Oak for sale here in Victoria! The timber yard man reckons it’s only good for fence posts anyway! There is a lot of Mountain Ash though.

“If you have evidence that nitens is unsuitable for those other purposes, or veneer, would you please share that.”

There is no evidence I am aware of that nitens is “suitable” for those other purposes, or veneer. Otherwise, you wouldn’t be worried about your investment, Trevor.

“BTW Gunns Plantations are not and never were obliged to sell timber off-take to Gunns. If the pulp mill is not built as planned, there will be much nitens available to sawmill.”

No, but who were/are they going to sell it to? Gunns needed it all and more to feed their pulp mill though. And who is going to sawmill it?

“Funny : I checked and apparently there isn’t much Tassie Oak for sale here in Victoria! The timber yard man reckons it’s only good for fence posts anyway!”

Not a very knowledgeable timber yard man then. Tassie Oak is probably present in just about every Australian home as architraves, etc. I have NEVER heard of it being used for fence posts. Then again, maybe it’s all been clearfelled and woodchipped into oblivion?

Posted by Russell Langfield on 10/01/12 at 03:12 PM

One either gets subtlety or one doesn’t. This is the end of a very long one-way street. I passed a neon sign on the way “Warning: pedestrian, thinking, ahead”

Key Messages
Research has shown that shining gum and blue gum are the only eucalypt species that can be reliably
grown in commercial plantations in Tasmania.
• Less than 20% of Tasmania’s current eucalypt plantation estate is being pruned and thinned to produce pruned sawlogs suitable for high-value appearance uses. It takes about 25 years to grow these pruned sawlogs, and significant volumes will not be available before 2020.
• The remainder of Tasmania’s eucalypt plantations are grown for pulpwood. Small-diameter unpruned logs from shining gum pulpwood plantations can be sawn in specialised mills to produce boards suited to structural (construction) applications. These compete with radiata pine structural boards, and fetch a far
lower price than do select and standard grade boards from native forest sawlogs.
• When eucalypt plantations are pruned and thinned, important differences remain between plantation grown boards and boards from native-forest eucalypts:
o Plantation shining gum is prone to developing internal checking (small cracks inside the wood)
as the sawn boards dry. While they can be closed up by steam reconditioning, closed checks
may still limit the use of shining gum boards in certain applications.
o Plantation timber has lower stiffness, hardness and durability than some native forest eucalypt
timber species, making it unsuitable for some applications.
• Clearwood boards suitable for some high-value uses can be produced from pruned plantation shining gum and blue gum sawlogs, provided appropriate sawing and wood drying strategies are followed.

Posted by Trevor Burdon on 10/01/12 at 05:45 PM

... and for some research-based follow-up.

FEA used to sell E.nitens (non-select, young thinnings) branded as EcoAsh (FSC certified) through Bunnings stores. I did see it in their Port Melbourne store a year or so ago, without knowing its source.

It is no longer stocked, and current staff (largely casuals) had no further feedback on its actual suitability or otherwise for its suggested use in general construction and framing.

To summarise E. nitens has been sold in Australian timber yards and it is not recommended for fence posts.

Posted by Trevor Burdon on 10/01/12 at 06:18 PM

#36. There are plenty of browntop stringybark fence posts sticking out of Tasmanian soil. This species (E obliqua) is one of the three marketed collectively as Tassie Oak. The other two are E regnans and E delegatensis (which don’t make good posts)

#38. Update. EcoAsh was produced primarily from clearfelled 15 - 16 y.o. E nitens but with a very minor proportion milled from thinnings (age 9). This product was definitely not FSC certified.

It’s no longer stocked because it’s no longer produced but local builders poo pooed it when available anyway.

Regarding REDD Forests and carbon storage, they only deal with native forest which is otherwise harvestable, for carbon storage. Any form of plantation won’t qualify as these sites have already been converted from NF.

Posted by mjf on 11/01/12 at 12:15 AM

#37, #38; I share your perplexion re Mr Langfield; I raised many similar points about plantation nitens; and indicated that further information was available for his analysis for the simple trouble of punching a few keywords online, but to no evident avail.

Posted by hugoagogo on 11/01/12 at 01:48 AM

Re #36 and 38
What you quoted just there Trevor proves that ‘shining gum’ if not specially treated in all manner with kid gloves, making it very expensive, is not good for much other than woodchips.

Your plantations haven’t been pruned in recent times, so any other use has gone out the window. They were never intended for any other use than woodchips and Gunns and FT made sure of that. EcoAsh went out the window as FEA went into receivership and the ‘special’ mill was bought and I believe shut down by Gunns.

“To summarise E. nitens has been sold in Australian timber yards…”

But not anymore, eh? Why?

“...and it is not recommended for fence posts.”

Hate to say, I told you so.

Now, what’s the report back on your plantations re #14 you promised?

Posted by Russell Langfield on 11/01/12 at 06:36 AM

Re #39 Thank you mjf. I have not been able to find the reference to FSC for EcoAsh again and defer to you on that one. I see now that Brewsters (K&D) also stocked EcoAsh as sustainable plantation timber for flooring and framing.

Re #41 GPL have reported some progressive pruning of my plantations for timber. I did make several representations to their Board.

Am not sure how you so confidently state ‘very expensive’ when the reference I gave you gives a price equivalent to the MGP10 structural pine - ie $3.00 /m and $940 /m3 - both much cheaper than native forest ‘ash’ and generally considered sustainable.

BTW, I prefer to contribute to discussions where the person asking the question actually wants an answer - rather than choosing to ignore any feedback, confound the issue under discussion with related but spurious invective and then demand more with very little to offer themselves.

Mainly for other readers who have rejoined this thread ...

I have not yet established that my GPL managed assets are safe from becoming ‘charged property’. The Company Secretary is now doing further research himself on the matter. He believes a separate financial facility for operating finance will become available should Gunns fall over. I have given him authority to use my access to the Willmotts documents and he is now reading the Receiver/RE (yes, inconvenient dual hats after the Receiver successfully removed the first replacement RE on grounds of insufficient capability) affidavits and a very comprehensive Poyry valuation analysis. He had little knowledge of what is happening in that Federal Court case. That is that growers assets have been ‘disclaimed’ and are now available for sale by the Receiver.

GPL do have a Risk Management Policy and Process which includes financials, but it appears risks are not reviewed strategically and as recent events demand. In this respect their risk management is very poor.

I have requested an update for growers from the CEO.

Posted by Trevor Burdon on 11/01/12 at 08:43 AM

Re #39
Thanks for that info, Martin.

Re #40
Read #39 ;)

Posted by Russell Langfield on 11/01/12 at 08:48 AM

Re #42
It doesn’t look too good for your ‘investment’, no matter which way you choose to look at it.